When we think of the damage wrought by the bursting of the housing bubble, we tend to think of the Great Recession and the broad damage to jobs and incomes. But there’s another dimension that’s less appreciated: wealth destruction, especially for minority households.
A new study out today from the Pew Research Center shows some pretty shocking losses in net worth. That’s a much broader concept than income, including family assets minus liabilities.
For many middle-class households, and especially for minorities, their main asset is not their stock or bond portfolios…it’s their home. And when its value plummets—or when they lose it—well, the result is in the chart below.
Between the mid-2000s and 2009, median white net worth fell about 16%, from around $135K to $113K (in 2009 $). But black and Hispanic wealth was decimated, falling by over half for blacks and two-thirds for Hispanics.
Surely, some of that wealth, I’d guess a non-trivial share, was a result of the bubble itself, along with the financial practices, like bad underwriting, that inflated it. But there’s no getting around that this is a major backslide for minority households, and it will take years, if not decades, for them to climb back.